Latest / Financially Fabulous / The Last One Paid
Transcript
- Christyne Gray: Years ago, back when She Profits Now was still very small, in our infant stage, I would call it, it was in a position where I was the one running payroll every other Friday. And I got into the habit of scrolling all the way down to the bottom of that report before I closed up my computer. And every name on the list was attached to a number in the same order, week after week, payroll after payroll. And mine was down there too, more often than I want to admit, however, the number next to it was zero. Not because there wasn't money moving through my business that period, but because it always seemed to have somewhere else more urgent to go before it got to me. I didn't think of it as a problem at the time. And I really truly thought of it as proof. If I could go a little bit longer without my own pay. That meant that I was serious enough about this business to sacrifice for it. Everyone else got paid because the business owed them that, plainly and without question. What I was owed felt more negotiable because I was the one person in the arrangement who wouldn't quit. I was the one person in the arrangement that would spend my time to get through whatever was happening. And I wouldn't stop showing up on Monday, no matter what the account looked like on Friday. This is the Financially Fabulous podcast. And last time we spent the whole conversation with a tax bill that shows up feeling like a surprise instead of a system. I told you at the end of that episode that I wanted to look next at a different number, one that shows up on the owner's own paycheck or doesn't show up. At all. I want to spend this conversation there. Because in nearly every established retail business that I've sat inside the numbers of, the owner is the last person the company reliably pays. And by the time we're having that conversation, she has usually stopped noticing that it's unusual. Here's the sentence that I hear instead, in one form or another, more than I would like. To have happen. Here's what I hear. Everyone gets paid before I do. She says it plainly, sometimes almost proudly, the way you described a fact of nature rather than a decision that's been made quietly, dozens of times, without ever being named as a decision. I want to slow down on that word, decision, because I don't. Think most owners experience it in that way. Payroll for the team goes out because it's due. The vendor gets paid because the relationship depends on it. And rent goes out because the lease says so. Every one of those obligations arrives with a date attached, and the business organizes itself around meeting it. Owners' pay rarely arrives with a date attached. It arrives as whatever is left over, if anything is left, after everyone else with a date has already been honored. That's not a personal failing. It's what happens when one line in the entire financial structure of the company is treated as flexible, while every other line is treated as fixed. And the reason it becomes that one flexible line. so easily is that the person it affects is the same person deciding whether to enforce it. Nobody sues you for missing your own payroll. Nobody calls to ask where their check is. The only person who feels the absence is you and you've likely gotten quite good at absorbing things that other people would refuse to. I think that there's something underneath this worth naming Honestly, because I hear a version of it often enough that I don't think that it's incidental. A lot of owners have quietly come to believe that being unpaid or underpaid is a form of leadership. That the sacrifice itself is evidence of how much they care, how invested they are, how far they'll go for the people in the customers who depend on the business. I understand where that belief comes from. I have felt it myself. But I want to offer you a different way to think about it because that belief left unexamined doesn't actually protect the business. It just makes the owner the one input. That the entire financial model quietly depends on, never asking for what it needs. Here's the shift that I want to walk through with you. Owner's compensation is not what's left over once everything else has been paid. It's supposed to be the one of the fixed costs that the business is built to cover in the same category as payroll and rent and the vendors that depend on you. Not a reward that shows up only when the month goes well. When you treat it as a leftover, you've built a financial model that only works if you personally absorb the difference between what the business generates and what it actually costs to run indefinitely, without that absorption ever being counted as a cost anywhere on the page. That distinction matters for a reason beyond fairness to you. A business that can only function because its owner is willing to go unpaid is not actually a healthy business. It's a business whose true operating cost is being hidden because the larger line item, your own labor and judgment and risk, has been zeroed out. It's been priced at zero. Any projection built on that number is wrong before you even start. Any conversation about whether the business is truly profitable is incomplete without it. I want to be specific about what I mean by consistency, because I think that owners often hear this conversation and assume that it's about the amount. When the amount is usually the second problem, not the first. The first problem is almost always irregularity. Paid one month, skip the next. A small amount some weeks. Nothing for a stretch after that, then a larger draw when the bank balance happens to allow it. That pattern makes it nearly impossible to plan a personal life around what the business is producing for you. And it also makes it nearly impossible to tell later whether the business is actually strong enough to support you. Because the number moves for reasons that have nothing to do with performance. And everything to do with whichever obligation felt loudest that particular week. A financially intelligent owner treats her own pay the way that she'd want any key role in the company treated. She sets a number that the business is expected to produce and protect, even if that number starts smaller than she'd like, and she pays it. on a schedule the same way payroll goes out on a schedule. Growing that number later is a real and worthwhile goal. But growing it later depends on first making it dependable because a business can't build towards paying you more if it's never had to prove it can pay you the same amount twice in a row. There's a question that I'd like to ask you to sit with and I think that it gets at something most owners Have never had to answer directly. What would it actually cost this company to replace the work that you do at the level that you do it if you weren't the one doing it? Not the founder role, the operational work, the buying, the leadership, the decisions, Most owners have never priced that because they've never had to. They've simply done the role. They've been the role. Rather than putting somebody else in the seat, somebody else that in theory has to be paid a market rate. When you do, when you do put a number to that question, it's worth comparing it honestly to what you're currently taking home. The gap between those two numbers is usually where the real conversation about owners' pay. needs to start. So here's what I'd like you to look at this week. Pull the last two quarters and trace what you actually paid yourself, not what you meant to pay yourself or what you'd have said if someone asked you casually. Look at whether it happened on anything resembling a schedule or whether it moved with the bank balance instead. If it moved with the bank balance, that's not a character flaw. It is actually a sign that the owner pays. Has never been built into a model as a real protected cost of running the business. then bring one question to whoever helps you look at the numbers, whether that's your bookkeeper, your accountant, or a broader financial team. Ask what the business would need to be true in revenue, in margin, in cash conversion for you to be paid a specific, consistent amount every single pay period, the same way your team is. Not someday, starting now. Even if the number is modest at first, if the honest answer is that nobody has ever run the calculation for you, that tells you something worth paying attention to about whether this relationship is built to protect you or simply to keep the businesses book technically correct. The next time we're together, I want to look at what happens on the other side of this same resource. So many owners eventually do bring on help, hoping that it will finally lighten what they're carrying and then find themselves saying some version of, I hired someone and I'm still doing everything. I want to spend real time with why that happens and what it actually takes for a hire to create capacity. Instead of simply adding a name to the same payroll report, they've been scrolling past your own for years. I am Christyne Gray. Thank you so much for being here, and I'll meet you back here for the next episode.